The merger of the companies, which has been sponsored by private equity firm CVC Capital Partners, will create a massive global player with sales of around 1.5bn ($2.6bn) and 8,000 staff.

EU competition authorities still need to approve the deal, which has been the subject of rumours since Newstec. Xsys and Flint Ink expect to complete the merger by 30 September.

It follows the creation of Xsys late last year after CVC bought and merged BASF's printing systems division and ANI Printing Inks to create a 570m-turnover company.

Flint Ink chief executive Dave Frescoln will keep the role in the new firm, while Xsys chief executive Peter Koivula becomes vice chairman.

CVC is becoming a major force in the print and consumables arena. Its other investments include packaging groups Britton and Kappa, containerboard manufacturer AssiDomn and paper firm Torraspapel. It has also been linked in press reports with a possible bid for the Daily Mirror.

CVC managing director Christian Wildmoser said: "Flint Ink, Xsys and CVC are creating a stronger competitor better placed to serve customers in a fragmented market, where size is of critical importance for the success of the business."

Charles Murray, corporate vice president and UK group managing director at Sun Chemical, the world's largest ink maker, described the deal as "a reflection of the lack of suitable margins in the industry".

"The only way to survive is through consolidation. It's sad that it's not the ink companies driving it, but the venture capitalists. It underlines and reflects the inadequate returns in the market."

Story by Josh Brooks